Thursday, July 03, 2008
Annual job growth fell to 0.0 percent, its lowest level since November of 2003, as the Department of Labor reported the U.S. economy shed 62,000 job in June and the unemployment rate held steady at 5.5 percent.
Downward revisions were applied to data for previous months, the original April estimate of -28,000 revised to -67,000 and the May tally of -49,000 adjusted to -62,000. So far this year, nonfarm payrolls have declined by 438,000, most of the declines coming in construction and manufacturing.
For the month of June, job loss was most severe in the professional and business services category which fell 51,000 (mostly temporary help - not a good indication for future economic activity), followed closely by construction and manufacturing, down 43,000 and 33,000, respectively.
Gains occurred in the usual places - health care (up 15,000), education services (up 15,000), accommodation and food service (up 21,000), and government (up 29,000).
It seems likely that the accommodation and food service area will begin to experience job losses in the months ahead given that people are traveling and eating out less as evidenced by lower miles driven and the announcement earlier in the week of store closures and layoffs at Starbucks.
This category is also likely to be revised downward when the birth/death model data is revised - so far in 2008, more than 300,000 jobs have been added to this category through the birth/death model (on a "not seasonally adjusted" basis).
In related news, first time claims for unemployment insurance rose 16,000 to 404,000, the second time in recent months that jobless claims have risen above the psychologically important 400,000 level.